Exam 11: Technology, Production, and Costs

Use the following graph to answer the following questions. a. If the wage rate and the rental price of machines are both $50 and total cost is $800, is the cost-minimizing point A, B, or C? b. If the wage rate is $40, the rental price of equipment is $120, and total cost is $1,200, is the cost-minimizing point A, B, or C? c. If the wage rate is $60, the rental price of equipment is $90, and total cost is $1,800, is the cost-minimizing point A, B, or C?

Employment in the oil fields increased rapidly beginning in 2005, reaching a peak of between 100,000 and 110, 000 workers in 2012, where employment remained until early 2016. Then, employment began a rapid decline as oil prices dropped by more than half. By early 2019, oil prices had risen by almost 50 percent since 2016 and production had risen by more than 30 percent, but employment was almost 20 percent lower. Which of the following statements best describes this situation in the oil industry?

-Refer to Figure 11-12. The lines shown in the diagram are isocost lines. Which of the following shows a decrease in the price of capital while the price of labor remains unchanged?

Table 11-8 represents the monthly output of five companies in the electric scooter manufacturing industry. Minimum efficient scale in this industry is a monthly output of 27,000 electric scooters, and the industry has a typical U-shaped long-run average cost curve with no constant returns to scale. -Refer to Table 11-8. Which of these companies are on the downward-sloping portion of the long-run average cost curve?

-Refer to Figure 11-16. Assume that production isoquants are convex. Total cost and output produced must increase for each of the following movements except one. Which movement is the exception?

-Refer to Figure 11-12. The lines shown in the diagram are isocost lines. If the price of labor is $50 per unit, what is the price of capital along the isocost CE?

Elegant Settings manufactures stainless steel cutlery. Table 11-9 shows the company's cost data. -Refer to Table 11-9. Elegant Settings experiences

-Refer to Figure 11-11. Which of the following statements about the input combinations shown in the diagram is false?

Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory. In the following graph, the relationship between costs and output for the smaller factory is represented by the curve ATC1, and the relationship between costs and output for the larger factory is represented by the curve ATC2. a. If Argyle expects to produce 3,600 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain? b. If Argyle expects to produce 5,000 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain. c. If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6,500 sweaters per week, why isn't it also lower when Argyle produces 4,000 sweaters per week?

-Refer to Figure 11-11. The movement from isoquant T to isoquant U depicts

-Refer to Figure 11-17. A curve that connects points A, D, and E is called

Suppose the total cost of producing 40,000 flash drives is $120,000, and the fixed cost is $30,000. a. What is the variable cost? b. When output is 40,000, what are the average variable cost and the average fixed cost? c. Assuming the cost curves have the usual shape, is the dollar difference between the average total cost and the average variable cost greater when the output is 40,000 flash drives or when the output is 60,000 flash drives? Explain.

When oil companies implemented changes which allowed them to increase oil output with fewer workers, this represented a positive technological change.

Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 in expenses on equipment and hairdressing material. Based on this information, what is the amount of her explicit costs for the first year?

-Refer to Table 11-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed. The average product of labor will equal 66 boxes when Manny hires

Figure 11-10 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCa, ATCb and ATCc. -Refer to Figure 11-10. The minimum efficient scale of output is reached at what rate of output?

Figure 11-10 illustrates the long-run average cost curve for a firm that produces picture frames. The graph also includes short-run average cost curves for three firm sizes: ATCa, ATCb and ATCc. -Refer to Figure 11-10. In the short run, if the firm sells fewer than 5,000 picture frames per month

Fill in the missing values in the following table. Draw one graph showing how total output increases with the quantity of workers hired, and another graph showing the marginal product of labor and the average product of labor.

Figure 11-13 shows the optimal input combinations for the production of a given quantity of cotton in the United States and in China. -Refer to Figure 11-13. Which of the following could explain why the United States and China use different input combinations to produce a given quantity of cotton and yet, each country produces that quantity at the lowest possible cost?

-Refer to Figure 11-17. Starting from point E, a movement along the isocost to point F